Posted
by
Zonk
on Friday July 14, 2006 @09:27AM
from the a-little-monopoly-between-friends dept.

AdamWeeden writes "According to the EETimes, many of the states in the U.S. have entered into a class-action lawsuit against a group of eight DRAM manufacturers. The companies are accused of price-fixing computer memory for over five years, beginning in the late 1990s." From the article: "Four companies and 12 executives have so far pleaded guilty to participating in the conspiracy and have been assessed more than $730 million in fines. In May, three of the four companies, Samsung Electronics, Hynix Semiconductor Inc. and Infineon Technologies AG agreed to pay a total of $160 million to settle class action suits related to price fixing. Elpida Memory Inc., the fourth company to plead guilty, is still involved in the class-action suits."

Instead of fining these companies, they should force them to provide double the amount of memory for the same price for say 90 days, e.g. 256mb chip for the same price as 128mb chip: that way the consumer benefits instead of the government.

This way you are actually helping them by creating a gold rush which will clear their stock inventory in the next 90 days and they can even write it off as a loss as well.

You do understand that the write-off doesn't go directly against the tax bill, right? Assuming the tax rate is 20%, "writing off" a $100 loss only reduces the tax bill by $20, they still have that other $80 that is lost.

Oddly enough, today I'm going to defend Bill Gates. He could make a lot more money by keeping it in his hands, rather than giving it away. My read on the Gates' charitable work is that it like Carnegy's or Rockefeller's; namely mean, conniving, cheating bastards trying to assuage their guilt by turning on the tap of funds to leave a nicer legacy than villainous pillagers.

You are an idiot, Mr. AC. You can take Bill Gates out and flog him, for all I care, he's a disengenuous son of a bitch and he probably is manipulating the overall system to make money, but he's not doing it to save money on taxes.

You write off 100 in BoGoF (Buy one get one free) by court decision. You lose 80, win 20 by taxes. That is what it seems.

Well... Not so.

You do that with old inventory only (after all you used to infringe and do not do it any more, why should you compensate punters with items that have nothing to do with the offence). You would have had to sell these at a loss to clear inventory anyway. So your loss is not 80, it is more like 40. As in any BoGoF case a certain percentage o

This way you are actually helping them by creating a gold rush which will clear their stock inventory in the next 90 days and they can even write it off as a loss as well.A penalty is supposed to hurt the penalised, not the improve its financial and inventory positions.

Huh! If this is going to be good for them, then why don't they do it themselves?Is anybody going to stop them?

Yes, but the government raises mosr of its money from taxes, so a fine collected by the government ought to either pay off a bit of the debt (thus reduced taxes slightly in the long term) or lead to a little more money in the kitty so that taxes don't need to be raised as much later.

The drawback here is that these companies are all suppliers to all the big OEMs. Dell, HP and others use these companies for all the boxes they ship. Sometimes buying from companies like this is unavoidable.

Punitive damages should be paid to the government, with no lawyers' cut. Then we'd see how concerned the plaintiffs and lawyers really are about serving humanity through lawsuits.

EXACTLY! I think it's important to allow punitive damages because sometimes they're the only incentive an entity has to act responsibly. However, I don't see any justification for allowing another entity to profit from that penalty.

If a policeman writes me a speeding ticket, he doesn't get a percentage of the fee, and that's

Sometime, the only incentive for lawyers to pursue class action lawsuit is the insane amount of money they make from it.

"Give lawyers more money" is never, never the correct solution. The honest ones won't change their practice, but the scummy ones will flock to it instantly. Well, right now we're in the position that only the scummy ones seem to be profiting - when was the last time you heard of a morally legitimate class action lawsuit? - so that would tend to indicate we've gone way too far in the wr

That's because it's always easier to spread-out rip-offs over as many people as possible. The way the US is going, the majority of its people will be lawyers within 30-40 years, and *then* the lawyers will get their comeuppance as they sue each other into oblivion.

It is true that all of these memory manufacturers are going to pass the cost of this to the consumer. But you won't see that cost directly, because only the telecom industry is allowed to misrepresent their prices so blatantly. Say you walk into Best Buy and see a stick of memory that costs $100. If they actually charged you $130 by including a dozen different taxes and surcharges then you could sue them for false advertising. Yet our telecommunications industry gets away with this behavior. It steams me ev

Why why why why why when these companies do crap like this don't we just abolish thier corporate charter, sell their assets to their competitors and realse their patents and copyrights into the public domain and abolish their trademarks? I'm getting very tired of hearing about large corporation X acting against the public intrest by breaking the law. Make it so that shareholders will punish them for breaking the law and a corporation will not break the law.

That would involve punishing a lot of people for crimes of a handful. Most of the sharehholders had no way of knowing that such illegal activities were going on. Why should they be punished substantially more than they gained?

As a shareholder in a limited-liability corporation, should the government decide to dissolve the corporation, they'd be out their stock, and that's it. This was the risk they signed up for when they invested in the company.

My personal belief is that we should stop using the "corporate veil" to protect everyone in the company. Take Merck for instance, if I went out and gave people pills that I knew could kill them and they do, I'd probably be

In the US, the SEC requires filings concerning a summary of all major company decisions over the course of each quarter. Between the 10-Q and the DEF-14A, any given stockholder has enough information to complain loudly to the Board of Directors.

What I meant by this comment is make corporate punishment so severe that any illegal activity or potentially illegal activity will have the shareholders firing the board for fear of thier share value dropping drastically as the assets are sold off and distributed to them (after creditors).

"Don't you mean 'the government?' Shareholders are the company. They probably think that breaking the law is good if it turns a profit and they don't get caught."One: Shareholders are not the company. They are the owners of the company. They are driven by profit motive, obviously, however, doing anything illegal to the point where the shareholders can find out is WAY too high a risk for the shareholders.

Your entire statement shows a critical misunderstanding of how a publicly traded business works. Do you

Nowhere in my previous point did I say that shareholders are going to be finding out about the illegal activity. Only that they would probably be happy with it. You can have the latter without the former. But that's a red-herring.Doing anything illegal to the point where shareholders can find out might be the same as getting caught, and if so it fits under my initial argument of not getting out.

What we can talk about here, though, is that few shareholders will drop a company because it's questionable if

Unfortunately that would put a whole lot of people out of work, and 99% of what the government does is make sure there's a lot of jobs.There's probably a reason my plan is faulty, too, but I'd much rather see any company guilty of price fixing lose the right to set its own prices. You do it, you give the government 200 grand a year to pay for a group of three guys (or however much and many is necessary for your company size) to continuously audit you and set your prices for you at some mandated lowered pro

Ah I don't agree with more government involvement. The market does a fine job regulating price when it is allowed to (if there is health competition, no monopolies and no collusion). If you make it so that it is very inadvisable to price fix the shareholders will make sure no one does it. Massive fines and invest that in public research in the field if you don't like the corporate death penalty. Just don't let them get away with it with a tiny fine.

You know a way for the government to shut down a company without government involvement? If they break the law, the government kind of has to get involved.

Although my plan doesn't work anyway. It would make it very difficult for competitors entering the market to compete, so the price would have to be mandated to be an estimate on what the product would be sold at by an honest company and then have the additional profits funneled into road repair or governm

Ah, but selling off company assets can be handled by the private sector, you don't need government to do it, just to sanction that it should be done. You just turn it into a debt owed to the creditors, then to the shareholders. Then the assets are sold in the usual way.

Your system requires a new branch of government that would set 'fair prices'.

"I'd much rather see any company guilty of price fixing lose the right to set its own prices."This alone would collapse any business with variable costs, R&D, or any other nonstatc drain on their bottom line (ie: every company on the planet). If they survive the initial shock (for five to ten years), they will be able to utilize new technology and make rediculous profits on old tech.

Usually, this is only provided in combination with government mandated monopoly (like the airline industry of the pre-70'

I think you're largely onto something but there's a lot of colateral damage to [potentially] innocents.But it's mostly "foe-show!" that "corporate entities" manage to escape punishment for breaking laws that ordinary people might otherwise be thrown in jail for.

At present, "breaking laws and getting away with it" is translated as business risk and just another part of doing business. Crimes against humanity and all that are just a part of it. There has been some improvements in the corporate accounting re

Yeah, that's all nice and all but when the colluders own 100% of the market it's hard to get in. You think there is only 8 dram manufacturers in the world? Hell no. You just haven't heard of the others.The problem with price fixing is the same as with monopolies. It reduces your ability to choose competition. If company A and company B collude and sell otherwise identical products (e.g. they're not competing) and they sell them at the same price, they're effectively one company.

If those 8 companies were splitting the sales of ram, it only takes one company to come in and sell it at a proper price and take 100% of the business...and it only takes one member of the cartel refusing to license their DRAM patents to the upstart to make that business 100% illegal. The free market is almost always powerless to correct abuses of a monopoly or a cartel.

What I meant by this comment is make corporate punishment so sever that any illegal activity or potentially illegal activity will have the shareholders firing the board for fear of thier share value dropping drastically ask the assets are sold off and distributed to them (after creditors).

So they fixed prices, so what, memory prices in the mid/late nineties plummited. Early 90s buying a 4 meg chip costed hundreds, mid 90s a 32 meg chip cost under a hundred, by the end of the 90s we were paying under a buck a meg, heck now it's what, under a buck for 10 megs?

In the end, the consumers will see none of it (who's really going to go through to paper work for a $3 rebate?), the lawyers will see millions, and the government will get the unclaimed payouts.

In the end, the consumers will see none of it (who's really going to go through to paper work for a $3 rebate?), the lawyers will see millions, and the government will get the unclaimed payouts.

I've been an involuntary class member for several of these worthless fucking class action suits that only make the lawyers richer. And what did I get? Twenty minutes of free long distance phone calls, or maybe a free CD from the same damned company that screwed me in the first place.

So they fixed prices, so what, memory prices in the mid/late nineties plummited.

In other news, transistor densities doubled every 18 months or so during the same timeframe. Also, water is wet and the sun is hot. In what way does anything you or I said make it OK for a company to break the law?

Price fixing is artificially inflating the price across the industry.So prices were dropping. That just means costs were dropping even more dramatically, and the memory companies were using it as a cover for their inflated prices.

Just think. By the end of the nineties, we could have been paying under a buck for 5 megs. By today, that could be 30-40/$.

IE: Just 'cos prices are dropping doesn't mean they're not still screwing you. It just means they're being smart enough about it to convince you you're gett

Whether it was a little $ or a lot of $$$, you were a victim if you bought a computer, a stick of ram, or anything related to DRAM during that five year period

Are you really? Did someone force you to spend your money on that DRAM module? If you didn't like the price then why did you buy it? The price gouging argument has some merit when circumstances dictate, such as ripping people off for gas and lodging while they are trying to escape a natural disaster, but since when is DRAM an emergency purchase?

personally I think the case is questionable at best, more than likely this is Micron, the last US RAM manufacturer, using it's political clout to disrupt other companies business.

Why do I think it's not a real case? Because at the same time this was supposedly going on, Micron also accused Hynix 9the most famous, but several other too) of accepting government (Korean) bailouts because they nearly went bankrupt from the free fall of the dropping prices. Micron was arguing in the past that during the sa

Except that the companies could all raise the prices on their memory to pay for the punitive damages, the class action lawsuit payout, and the lawyer fees.Is it right for them to fix prices? No. Is this class action lawsuit going to benefit the consumers? No. Is this class action lawsuit going to fatten the wallets of lawyers? Yup.

I'm not against the punitive damages, but this class action lawsuit is a waste. I would rather see individuals from the corporate entities be held responsible. Instead of getting

Hello, I am a representative from Yahoo! Inc. - you have utilized our Trademarked name without prior consent, As damages we seek to acquire your recent windfall of RAM, along with that of any persons who have participated in this breach of our intellectual property rights. Thank you and good day.

considering that this will be resolved by companies paying money to the NY AG, and not a criminal prosecution, my point is that this is grandstanding, and not law enforcement.

Three things. First, the fact that the AG gathered enough evidence against them to make a solid case caused them to plead guilty. That means that they'll have to pay the fines, and hopefully if the fines hurt enough, they'll be discouraged from trying it again (and this isn't the first time they've done it).

Here is one area that is very difficult to win the anarcho-capitalist debate on -- the cartelization of this particular market in this particular industry sounds very insidious and hard to compete with without the government intervening and bringing the hammer down.

Most people believe that memory manufacturing is a VERY expensive business. This is true in terms of overall numbers (billions), but it is false in terms of actual products required on the market. Memory is used in much more than just computers (cars, microwaves, cell phones, digital cameras, DVD players, etc), and it is a huge market, possibly a trillion dollar one coming soon. When you have a big market, a big demand and a low supply of manufacturers, it doesn't take much to raise the billions needed to enter a market where there is obvious collusion. 1 million Americans risking US$3000 in a market that you can prove is selling at a overwhelming profit is not a big risk -- and many people were aware of the over-priced memory market back in the 90s.

Yet I think the debate is won by the free marketeers when you realize that one of the biggest reasons for the cartelization in this case is patent and copyright law. Memory chips are heavily burdened by patents, and many of those patents are cross licensed by those in the cartel. This smacks of government-paternalism and is one reason why patents generally help the cartels and the State rather than the inventor. The cartel:inventor ratio in terms of who is helped by patents is very very high (more cartels are helped than individual inventors).

I believe the government is wrong for starting class-action lawsuits. We all know that few companies are hurt by class-action lawsuits, and even fewer "victims" are helped. The lawyers (who are the biggest supporters of the expanding State) win the most! Why don't we roll back before the cartel-State collusion and see what the real cause of this problem is? The biggest barrier to the market is NOT money -- stop thinking that! No matter what the financial cost is, if there is a profit to be made, people will invest. I don't care if it is quadrillions that are needed, as long as it is profitable (and cartels can always be beaten in price), people will risk money. The real barrier is the State -- no one can raise enough "force" to overcome the force of government patents and copyrights.

Why does political affiliation always have to fall to one of 2-4 labels (Dem, Rep, Grn, Lib)? Most people registered a Democrat don't align themselves with the Democratic Party platform and definitely don't act the way one would if they wanted a democracy. Most Republicans don't align themselves with the Republican Party platform and surely don't act the way one would if the wanted to live in a republic. I'm definitely not a libertarian -- the libertarians overall are still far too Statist for me. Anarc

Why when any two or more companies in the world get together and settle on a price for their product do we come down on them like a ton of bricks for price-fixing, yet when OPEC gets together and "FIXES" a price for oil we just bend over and take it up the tailpipe? Anyone besides me ever think about how hypocritical that is? Price fixing is bad, but why do we allow it for oil?

Maybe because American laws against price fixing wouldn't apply to an internation organization of which the US isn't even a member?

What do you think that we can do? We're a large consumer of oil, so we can apply economic pressue. That already happens though, and we already get very good deals. Believe me, gas is much less expensive in the US than in just about any other country.

Price fixing is illegal in the US. But to confront a group of nations on the same issue would require some sort of jurisdiction to take them to court in. What do you expect us to do about it exactly, invade one of their major member countries?

Meanwhile, if you don't like it, get your vehicle converted to diesel (expensive, but cost effective when you make your own fuel) or ethanol (almost pitifully easy, but less cost-effective when making your own fuel).

DRAM prices used be as predictible as MicroSoft stock: the price halved (doubled)
every two years. Even faster during a price war. But its been stuck at $100 (+/- $50) a gigabyte for about five years. This compared to flash which has fallen to $20 / GB from $300 in the same time period.

Havent we seen this a few times in the past? " Oh, bad industry.. you are fixing prices.. *slap on wrist*.. now be good.. " then we go thru it again in a few years as nothing ever changes. Governmental 'fines' are considered a cost of doing business anymore, and have long since stopped being a deterrent.

You realize you're also paying the salaries of the employees who have to design and implement the chips, the cost of machinery to fab them, the cost of labor to operate the fabbers, packaging, shipping, R&D, etc.

Yes, they price fixed. That doesn't mean it costs nothing to make RAM. Saying that just shows ignorance.

Where did you get that ridiculous idea? I have had two Macs serviced with third-party memory installed (one of them this year), and although Apple won't support the third-party memory, they will support the machine itself.

Take a look at England. They pay 6-7 pounds per gallon on gasoline. This, primarily, is because they have fewer subsidies on gasoline production.The US has enough subsidization to depress the price of gas well below the 15-16 $ it would cost without.

Yeah. $15-$16. Think about that next time you bitch about $3 at the pump.

Meanwhile, converting your car to burn ethanol requires you to bore out exactly three easily replaced components, and fuel grade ethanol is currently $3 and change per gallon - though n

+1 Insightful. Agreed. If you sue the companies for hundreds of millions of dollars they need to recap that money somehow. That'll just result in slightly higher costs until they've recovered from their injuries then they can be sued again!!

Gas on the other hand, that affects a greater portion of the US Market on a daily basis. I'd rather lose $5 on that one time investment in memory than be continually robbed for a products that requires more frequent purchases like music and gas.